http://www.telegraphindia.com/1120217/jsp/business/story_15145346.jsp

Bid to quantify spectrum cash

JAYANTA ROY CHOWDHURY

New Delhi, Feb. 16: The government is likely to set a target of Rs 50,000 crore as earnings from spectrum auction in this year’s budget. Around 500MHz of 2G radio waves and 200MHz of broadband will go under the hammer. Top North Block officials said discussions with officials of the telecom ministry seemed to indicate that the auction of 2G spectrum, to be vacated within the next four months, would not fetch the same price as the 3G auction in 2010. The government had earned a massive Rs 67,000 crore from the 3G auctions at a time the country was still recovering from the impact of a global downturn. Broadband auctions held in the same year fetched Rs 38,500 crore. This year the sale of broadband spectrum, which also supports 4G, could fetch a premium compared with the previous auction. But finance ministry mandarins want to keep a lower target as the spectrum to be auctioned could be less than half of the 440MHz sold in 2010. The 2G spectrum allocated to 10 firms in 2008, under what is now being described as a flawed policy, will have to go under the hammer within this calendar year after the Supreme Court revoked the licences of these firms. However, it is not clear whether the auction will be a limited one as demanded by firms such as Uninor and Sistema, or it will be open to all. Analysts say while pricing will depend on participation, most telecom firms and banks are financially stretched and will have less appetite for risks. The model to be used is likely to be a variation of Paul Klemperer’s spectrum auction model, which is the benchmark in most countries. Sources in the PMO said Prime Minister Manmohan Singh’s preference for the auction route was influenced by Klemperer, who teaches at Nuffield College, Oxford, where Singh studied for his doctorate in economics. Klemperer designed a successful auction process in 2000 that eliminated any possibility of bidders colluding to keep the prices down. This earned the UK government £22.5 billion from spectrum sale.